Scenario Planning in Practice

Understanding the Future to Create Strategy Today

By Art Kleiner

To make good decisions today, we need to understand the future more effectively. That doesn’t mean trying to predict what will happen. Predictions mislead us. A better approach is scenarios: to rehearse different versions of the future before they happen.

I've spent 35 years helping people organizations develop this capability, and I'd like to share what I've learned about how it works and why it matters.

My journey into scenario planning began unexpectedly, during my early career as a journalist. I worked with Royal Dutch Shell's planning team, helping them with what we then called computer conferencing, the predecessor to today's social media. This experience opened my eyes to a powerful way of thinking about the future that went far beyond simple prediction or forecasting. I later helped codify this method as the ghostwriter for Peter Schwartz's influential guide, The Art of the Long View, and explored the historical development of these methods in my own book, The Age of Heretics.

Today, I develop scenarios with my colleague Juliette Powell at Kleiner Powell International. I also teach these approaches at New York University's Interactive Media Arts Program (on the future of technology) and Wagner School of Public Service (on foresight) and work with organizations worldwide. It fascinates me how this method can help people see possibilities they hadn't imagined before and more importantly, helps them prepare for those possibilities in practical ways.

To understand scenario planning, think of Zen archery. In Zen archery, the goal isn't just to hit the target. It's to develop a deeper awareness of yourself and your relationship to the target. Similarly, in scenario planning, the goal isn't to predict the future. It's to develop a deeper understanding of the forces shaping that future and your role in it.

Sure, it's gratifying when a scenario you've imagined comes to pass. It’s especially gratifying when you avoid a harsh fate, or seize an opportunity, because of actions you took after a scenario exercise. However, the point of the exercise is developing several crucial capabilities:

First, you create a shared language for discussing complex possibilities. When a team can say "This feels like we're heading toward the 'Rules' scenario we discussed, " they can quickly align their understanding of a situation without having to explain all the details.

Second, you often find agreement on points that seemed contentious before. This happens because scenarios let you step outside your current positions and look at issues from a future perspective. For instance, when Shell Group Planning used scenarios to examine the future of energy, they found it easier to discuss controversial topics by placing them in hypothetical futures rather than arguing about immediate decisions.

Third, you learn to make more robust decisions: choices that work well across multiple possible futures. This is different from trying to focus your decision on generating one predicted future, like the outcome of a political election. Instead, you're looking for approaches that provide value no matter which way the winds of change blow.

Fourth, you get practice in "thinking the unthinkable, " considering possibilities that might seem too disturbing or unlikely to contemplate otherwise. The value of this became clear in South Africa's transition from apartheid. Scenario planning helped leaders envision and prepare for fundamental changes that would have seemed impossible to discuss directly.

Finally, you develop better awareness of your own biases and assumptions, while improving your ability to spot early signals of change. This enhanced perception helps you not just prepare for the future but actively shape it toward better outcomes.

Step 1. The Context: Understanding Your Environment

Before you can explore possible futures, you need to understand your present situation deeply. This requires assembling the right team and examining your context – becoming clear about what aspects of the future are most urgent for you.

Your team needs three distinct perspectives:

Decision-makers: A few people who will act on the insights generated
Subject matter experts from within your organization who understand its capabilities and constraints
Outside perspectives: people who can challenge your assumptions and bring broader knowledge

Suppose, for example, you’re working on scenarios involving international trade. Your internal experts might understand your current supply chain perfectly, but you also need someone who understands how supply chains have historically adapted to trade barriers. Why? Because history shows that supply chains tend to route around obstacles like tariffs in creative and illegal ways. You might have a vague awareness of potential “smuggling chains, ” but you need someone in the room who can explain how this dynamic might play out.

Similarly, when developing scenarios about AI, you need both technical experts and people who can imagine its social implications. For instance, right now, large language models are limited by how many tokens (roughly speaking, pieces of words) they can process at once. This technical constraint has huge implications for how AI might be used in organizations: in areas like performance reviews, training programs, or summarizing meetings. But understanding the technical limitation isn't enough. You need someone in the room who gets organizational psychology, and help you anticipate how people might react to and work around these limitations.

The context also includes your organization's culture and capabilities. How do you typically make decisions? What are your core strengths? What's your risk tolerance? Understanding these factors helps you develop more realistic scenarios and more actionable responses.

Step 2. The Scenario Question: Finding Your Focus

The power of scenarios comes from answering real questions that matter to real decision makers. If you're a Chief Human Resources Officer at a medium-sized company today, you might be wrestling with questions like: How will AI affect our existing jobs? How can we capture productivity gains while managing the human impact? What happens to our DEI initiatives going forward? These aren't abstract concerns. They're pressing issues requiring decisions now.

The key is identifying which questions truly need scenario analysis. Some questions are too immediate, like next quarter's staffing needs, while others might be too distant to act on meaningfully.

You're looking for questions where:

The answer isn't obvious
The implications are significant
You have some ability to influence the outcome
The timeframe allows for meaningful action

Choosing the right time horizon is as critical as focusing a camera. Too close or too far, and the picture becomes unclear. For fast-moving issues like AI, looking 3-4 years out might be appropriate because the technology is evolving so rapidly. For slower-moving forces like demographic shifts, you might want to look 7-10 years ahead.

Step 3. Driving Forces: Understanding What Shapes the Future

Driving forces are the factors playing out now: trends and events that shape everything that happens to us. Think of these as the winds and currents that will affect your journey, regardless of the course you choose to sail.

One of the most powerful driving forces today is demographic change. By 2035, sub-saharan Africa will have more working-age people (ages 18-65) than any other region—as much as 25% of the planet. This isn't a prediction , it's a mathematical certainty based on current population data. This chart comes from the International Monetary Fund:

However, the implications of this demographic reality depend on several uncertainties: How will global businesses adapt to this shift? How will different countries manage immigration pressures? How will remote work technology evolve to bridge geographical gaps?

Similarly, climate change creates driving forces we can't ignore. We know with certainty that climate-related weather disruptions will increase unless there's dramatic intervention. But the specifics—how severe, how fast, which regions will be most affected—remain uncertain. For businesses, this creates questions about everything from supply chain resilience to workforce mobility.

When identifying driving forces, it's crucial to suspend judgment but keep discernment. Don't immediately assess whether you like or dislike the implications, or how probable you think certain outcomes might be. At the same time, keep a skeptical eye on the data, and how reliable it seems to be. Become aware of your own biases and preferences, and try to see the data from alternative perspectives. All of this is essential for seeing the full picture.

Some driving forces can be quantified, while others resist numerical measurement. For instance, we can measure computing power trends or demographic shifts with precise numbers. But how do you quantify changes in public attitudes on controversial topics, or shifts in workplace culture? For these less tangible forces, look for meaningful indicators rather than exact measurements. Instead of relying on a single opinion survey about , which can be unreliable or biased, look for changes in the same survey results over time. Instead of trying to predict exactly what percentage of people will accept AI in their daily work, consider what level of acceptance would create a tipping point for your organization.

Step 4. Judging Importance and Uncertainty: What Really Matters?

One of the most crucial skills in scenario planning is distinguishing between what's predetermined and what's truly uncertain. This distinction helps you focus your energy on accepting and adapting to inevitable changes, while opening the door to unexpected but feasible possibilities.

I’ll illustrate this with a recent example related to scenarios for AI. After extensive research into computing power trends, misinformation patterns, and the role of human labor in AI systems (like the "ghost workers" who label training data), we identified several predetermined elements:

Computing power will continue to increase, though perhaps not at the same rate as in the early 2000s.
The demand for data security and privacy will grow.
There will be more demand for human oversight of AI.

However, we also identified key uncertainties:

The effectiveness of AI regulation: Would attempts to control AI lead to a black market in AI regulations?
The evolution of AI capabilities: Would technical limitations hold back the release of “artificial general intelligence” and other systems that operate beyond human control?
Public acceptance and trust: Would people embrace or reject AI in sensitive domains?

The distinction between predetermined elements and uncertainties isn't always obvious. Sometimes what seems predetermined is actually quite uncertain. Consider remote work. Before 2020, many assumed office-based work was a predetermined element of business culture. The pandemic showed how quickly such "certainties" can change. Now, many people assume remote work is here to stay, but that too is uncertain.

When evaluating driving forces, we use six key criteria:

Predetermined: Is this truly inevitable within our timeframe? For instance, the existence of twenty-year-olds in 2043 is predetermined (they're already born), but their career preferences aren't.
Plausible: Could this realistically happen? While we want to think creatively, scenarios need to remain within the bounds of physical and social possibility. Though flying cars already exist -- in helicopter-like prototypes – their widespread use by 2026 isn’t plausible. Self-driving cars, by contrast, could be on the road in many more cities by then.
Known: Do we understand this force well enough? Sometimes what appears to be uncertainty is actually just a lack of information. This is where research becomes crucial.
Relevant: Will this force significantly affect our core question? Many things might change, but not all changes matter equally to your specific concerns. Scenarios on the future of democracy will be affected by economic, social, and cultural trends, but probably not by trends in cancer treatment or haute couture fashion.
Upstream: Does this force influence other factors? Some forces, like technological advancement or demographic shifts, tend to drive many other changes. These deserve special attention.
Compelling: Does this force capture imagination and energy? Sometimes the most important scenarios come from forces that generate strong engagement, even if they initially seem less crucial. Gig economy working conditions, mental health awareness, and microplastic pollution once seemed like minor issues affecting comparatively few people. Now, they shape human, organizational, and government behavior.

Step 5. Composing The Stories: Crafting Plausible Futures

Now comes what might appear to be the most creative part of the process, but it's actually more like solving a complex puzzle. You're taking all the pieces you've identified , the predetermined elements and critical uncertainties , and assembling them into coherent pictures of possible futures.

For example, in looking at the future of AI, scenarios could include:

"The Black Market Future" - Strict AI regulation leads to a two-tier system: official, heavily regulated AI services, and a thriving underground market for unrestricted AI.

"The Great Disappointment" – Technological progress hits unexpected barriers in the limits of AI software and related hardware, preventing some of the revolutionary changes that have been predicted for this technology.

“A World of Deepfakes” – The flood of misinformation is impossible to control, leading many organizations and people without any ability to trust the information they receive.

What makes these scenarios valuable isn't their individual probability, but how they help us think about different possibilities. Each scenario should feel like a complete world, with its own internal logic and chain of cause and effect.

When creating scenarios, avoid these common pitfalls:

Don't simply create "good, " "bad, " and "middle" futures. That oversimplifies the complexity of real change.
Don't let your scenarios become too similar. They must be distinct enough to help you prepare for a wide range of futures in the real world. If two scenarios could coexist in the same future, they need to be changed – or combined.
Don't create futures that are impossible to act upon. Every scenario should suggest possible actions or preparations you could make today.

Naming your scenarios is more important than it might seem. Good names become shorthand for complex possibilities, making it easier to discuss and think about different futures.

In sessions with a digital technology company, we named our scenarios "Rules" (heavy regulation), "Tools" (competing innovations), "Pools" (industry consolidation), and "Gruel" (collapse and takeover by another company). These names stuck and became part of the company's strategic vocabulary. In our session on the implications, the company leaders resisted talking about the “gruel” scenario, but as events unfolded, it turned out to be the closest to reality. The company almost went under.

Step 6. Scenario Sub-Teams: Bringing Futures to Life

This is where scenario planning moves from an analytical exercise to an immersive experience. Small teams (ideally 3-5 people) deeply explore each scenario, considering both its logical progression and its human implications.

The power of a story line became strikingly clear during South Africa's transition from apartheid in the 1980s. This example shows how scenarios can move from intellectual exercise to profound catalyst for change when people truly inhabit the futures they're exploring.

The process began at Anglo American, one of South Africa's largest mining companies. At the time, their workforce consisted largely of Black workers laboring under apartheid conditions, paid almost nothing and enduring brutal conditions. The scenario team, examining demographic and economic trends, made a devastating discovery: apartheid was mathematically unsustainable. The country's demographics and economic realities meant the system would inevitably collapse.

The team developed two primary scenarios. They called them the "High Road" and the "Low Road." The High Road envisioned a future where South Africa found a way to dismantle apartheid without descending into civil war. The Low Road showed what would happen if the country failed to make this transition peacefully. The scenarios weren't just dry projections - they were richly detailed stories about how different choices would affect every aspect of South African society.

The company's executives, who were all men, weren't supposed to discuss these scenarios outside the organization. However, the futures described felt so real and consequential that they couldn't help sharing them with their spouses. The executives' wives, recognizing the gravity, demanded their own meeting with the scenario team.

Their question was devastatingly simple and personal: "Should we move our families out of the country?"

The scenario team's response crystallizes why good scenario work goes beyond mere prediction: "You only need to leave if the whole country fails to do something unprecedented." This answer placed the responsibility back on the leaders themselves - they weren't passive observers but potential shapers of South Africa's future.

This interaction transformed how the executives thought about their role. Their initial question had been narrow: "How do we maintain a viable diamond mining business in a changing South Africa?" But after experiencing these scenarios - after truly inhabiting these potential futures - they began asking a much broader question: "How do we help build a viable South Africa?"

This shift from corporate self-interest to national responsibility illustrates why scenario planning must be immersive. When people merely think about different futures, they remain detached and analytical. But when they truly imagine themselves living in those futures - when they consider the implications for their families, their communities, their legacy - they engage with the possibilities on a deeper level. This emotional and intellectual engagement often leads to profound shifts in perspective and priorities.

The South African example teaches us several crucial lessons about effective scenario work:

First, scenarios must feel real enough that people can genuinely imagine living in them. Abstract trends and statistics don't drive change - human stories and personal implications do.

Second, the most powerful scenarios often reveal uncomfortable truths. The Anglo American scenarios forced leaders to confront the fundamental unsustainability of their current system, something many had managed to avoid thinking about directly.

Third, truly effective scenarios don't just describe different futures - they help people understand their own agency in shaping which future emerges. The scenario team didn't just tell executives that change was coming; they helped them see their potential role in determining what kind of change it would be.

Finally, this example shows how scenarios can expand the scope of what leaders consider possible. The peaceful dismantling of apartheid seemed impossible to many at the time. But by helping people imagine how it could happen, scenario planning made the "impossible" feel achievable.

We use several techniques to flesh out the details to make the scenario immersive. Each scenario sub-team should explore:

Logical Progression: How do we get from here to there? What sequence of events would lead to this future?
Human Impact: How would people feel living in this future? What would daily life be like?
Winners and Losers: Who benefits in this future? Who struggles? How do different groups adapt?
Unexpected Consequences: What surprising effects might emerge? What second-order impacts should we consider?

We also use role-playing exercises. Have team members take on the perspectives of different stakeholders , employees, customers, competitors, regulators. This helps uncover blind spots in your thinking and reveals unexpected implications.

Step 7. Implications: Moving from Insight to Action

This is where scenario planning transforms from an intellectual exercise into a practical tool for decision-making. The goal is to move from "What could happen?" to "What should we do about it?"

When working through implications, consider three key areas:

Early Warning Systems: What indicators would suggest a particular scenario is becoming more likely? These might include:
- Legislative developments
- Technology breakthroughs
- Social attitude shifts
- Economic indicators
- Demographic changes
Robust Decisions: What actions make sense across multiple scenarios? These "no-regrets" moves might include:
- Building flexible capabilities
- Developing diverse talent
- Strengthening key relationships
- Investing in adaptable infrastructure
Contingent Strategies: What actions become important only in specific scenarios? For these, develop trigger points , specific conditions that would signal it's time to implement these strategies.

Step 8. Strategic Vision: Shaping the Future You Want

The final step moves beyond preparing for possible futures to actively shaping the future you desire. This isn't about picking your favorite scenario and trying to make it happen , reality will always be more complex than any single scenario. Instead, it's about understanding how you can influence the forces that matter most to your preferred outcomes.

We sometimes see this in scenarios for AI, business transformation, or democracy initiatives. They start out asking, “How do we protect our interests?” They are thinking of a particular threat. But through the scenario process, they realized they needed to ask a bigger question: "How do we help build a viable future?" This shift in perspective leads to a broader range of action.

Creating a strategic vision involves:

Identifying the elements of different scenarios that you want to encourage or discourage
Understanding your leverage points , where can you have the most influence?
Building coalitions with others who share your preferred direction
Developing concrete plans to move toward your desired future while remaining adaptable to change

Making It Work: Practical Implementation

While a full scenario planning process might traditionally take several months, modern tools and methods allow for more flexible approaches. I'm particularly interested using AI tools like ChatGPT and Claude to help generate initial scenario story lines, though human judgment remains crucial for selecting and developing the most useful ones.

Whether you spend weeks or months on the process, success depends on maintaining these essential elements:

Genuine engagement with uncertainty
Openness to surprise
Commitment to action
Regular review and updating of scenarios as conditions change

Remember, the goal isn't to predict the future perfectly. It's to prepare your organization to handle whatever future arrives while helping to shape that future in positive ways. In a world where AI, climate change, demographic shifts, and economic transformation are all happening simultaneously, this capability isn't just useful , it's essential for survival and success.

This article draws from my work at [Kleiner Powell International](http://www.kleinerpowell.com/), my teaching at New York University, and three decades of research and practice in scenario planning.